Two nights ago was the all-candidates event, and a theme that came up quite strongly was the idea that we should tighten our belts and do whatever we can to avoid tax increases. I am not averse to the idea of keeping tax rates as low as we can; I pay taxes too, and I too would like to have more disposable income right now! My household is around Brighton’s average income, we live in an average house, and I work 2-3 jobs at any given time, so I’m not somehow outside of the conversation about what Brightonians can afford. Inflation affects me too. I appreciated Catherine Stutt’s response, which went something like “raise your hand if you’d like to pay less for taxes…right after everything else gets cheaper too.”
So first, let’s acknowledge that: nobody wants higher taxes. Tax increases reflect inflation more than anything, as well as projects and purchases that improve the community for everyone. And second, let’s please acknowledge that, even though this council has spent a significant amount of money this term, we did count the cost. There’s no fun money in the budget, and I wouldn’t change the decisions we’ve made to get to this point. (I might change some of the decisions made several terms ago, when things like the wastewater treatment plant were put off, but beyond acknowledging the way that past decisions have shaped the present there’s no point in rehashing them.)
With those out of the way: what’s the deal with belt-tightening, do we need that here in Brighton, and what should it look like? Let’s start with the current state of things.
Brighton’s Financial Position
Next week we’re having a council meeting primarily to review our financial statements, so please do come out and see for yourself. But I can give a quick rundown of our position:
- Brighton has the lowest urban tax rate in Northumberland County, lower than Cramahe, Trent Hills, Cobourg, or Port Hope. If we had the same tax rate as urban Port Hope, we’d have an extra $5M/year in the budget. I don’t see that rate as something to aspire to, but I also don’t see Port Hope residents going bankrupt en masse because of their tax burden. (And if any of our residents are at risk of impoverishment because of property tax increases, there is a program at the County level to defer property tax increases, please reach out to municipal staff for more information!) I say all of this to contextualize our tax rates, because folks often compare them to Toronto or other larger centres where they’ve previously lived, places that have much lower tax rates. Those tax rates are low because they have a much higher population density: the cost of their streets and sidewalks and lights and services are split between a lot more taxpayers than ours are.
- Municipalities in Ontario have a borrowing limit that is calculated by determining our capacity to repay our debts – which is to say, it is affected by how much money we’re willing to bring in through taxes. If our taxes stay low, our borrowing limit also stays low. Our current borrowing limit is around $40M, and over this term we’ve gone through about half of that, mostly just for the wastewater treatment plant (though that borrowing will be phased in over the project timeline, so we haven’t yet used all of that debt, but we will). I am not comfortable continuing to spend at the pace we have been, but we currently have a lot of major projects that are simply due: we can’t keep kicking the can down the road, as they say. We inherited a lot of old problems, and we set out to work on solving them, and that took money that past councils were not willing to spend. It’s a reckoning of sorts.
- We had planned to offset some of these major expenditures through a new revenue source, the Automated Speed Enforcement cameras. They brought in $1.5M in the few months that we had them, though the number of tickets issued dropped by 75% over that time, so it would not have continued to be a cash cow for long. (Their goal, after all, was to stop speeders, not make money!) Premier Ford took that revenue stream away from us.
- A lot of municipal infrastructure is paid for through Development Charges, fees paid by developers as they build new neighbourhoods whose future residents will add wear and tear to existing infrastructure. The goal of DCs is to have “growth pay for growth”, but one of the downsides is that it raises the cost of new housing. So the provincial and federal governments are doing everything they can to reduce DCs, particularly in big cities where they amount to hundreds of thousands of dollars per housing unit. Here in Brighton it’s more like $35k per housing unit, but new limitations on DCs introduced this term apply to us just as much as they do to Toronto, which limits our ability to collect more DCs or use them for improvements to existing infrastructure.
- While we have used money from reserves over this term, we have maintained healthy amounts in reserve accounts.
So to summarize: Brighton has spent a lot of money in the current term on longstanding needs, using up a significant amount of our borrowing capacity and a little bit of our reserves; but we’ve maintained healthy reserve funds, we have a lot of room left to borrow, and we have the lowest property taxes around. At the same time, we are very limited in other ways to get funds for the things that we need and want: DCs and ASE are increasingly off the table as revenue streams, and so we really do rely on property tax increases to address the way inflation impacts our operational costs, or emerging needs in the community.
Needs and Wants: Projects for the Coming Term
We also have a lot of things that we want to build this coming term. Much of the work we’ve done in the current term has been planning for the future:
- Parks & Recreation Master Plan
- Transportation Master Plan
- Integrated Community Sustainability Plan
- Fire & Rescue Master Plan
- Stormwater Master Plan
- Updates to the Asset Management Plan
- Land Banking Plan
Plans, plans, plans! Each of these plans helps us ensure that our future spending is carefully targeted, but of course that implies future spending. If we decide not to implement any aspects of these plans next term, then these plans will have been a waste of time and money rather than a helpful tool for spending wisely.
The expenditures that come out of plans like this include things like:
- Catching up on deferred road maintenance and other infrastructure deficits;
- Building an emergency services station south of the tracks, as part of a coordinated strategy to also build a new station at the current location on Elizabeth Street;
- Adding traffic lights and crosswalks, sidewalks and bike lanes and trails, where they are needed most around town;
- Transitioning our municipal fleet to EVs, reducing their greenhouse gas footprint while also reducing their daily operating costs;
- Ensuring that our parks and facilities are fully accessible;
- Planning for, and beginning the process of, the replacement of our existing arena and curling rink and potentially getting a pool;
- Reducing the amount of water infiltration into our sanitary sewer systems, helping our wastewater treatment system work more efficiently; etc.
It would be overly simplistic to separate these kinds of projects into the neat categories of “wants” and “needs”. Many of these changes are things that are being phased in: nobody is proposing a one-time switchover from our current vehicles to EVs, but rather, as we replace vehicles at their end of life we choose the new vehicle to be an EV. We need a new vehicle, and we want it to be an EV, and on the whole we’ll save money even if it costs slightly more on the front end. It’s a similar story for things like road replacement, with the current project on Prince Edward Street being a prime example: we need new pipes, so while we have the road dug up for those we might as well also advance the goals of our Transportation Master Plan by adding bike lanes, sidewalks, and crosswalks, drastically improving transportation and safety at the same time as ensuring our pipes flow for another generation. Would it have been cheaper to not improve our roads at all at the same time? Sure. Would that be a wise decision, to miss out on the possibility of seeing big improvements for relatively little cost? Of course not.
Mandates
One phrase a candidate used was more specific, suggesting that we should not do anything that does not fall within the municipal mandate. That narrows the field considerably, referring to jurisdictional boundaries between municipalities and other levels of government.
Municipalities are known as the “children of the province” (I hate that phrase), and there was a time when municipalities operated entirely on a limited mandate from the province: we could only do the very specific things the province told us to do. But in the 90’s this began to change: the legal structure flipped, so that we are no longer limited to just what the province tells us to do, but rather we are limited by what the province tells us not to do. That’s why most provincial legislation on almost any topic includes regulations or limitations on what municipalities can do, or establishes ministerial oversight over municipal actions on that subject. We no longer have a mandate, strictly speaking, which is perhaps why the province can so easily download responsibility on so many files to the municipal level.
We still might look at the province’s frameworks of regulations and limitations and requirements as a mandate, of sorts. But given that we now have the freedom to do things beyond what is strictly required of us, it seems to me that limiting ourselves to that is effectively committing to do the bare minimum for our residents. I really don’t like that. I believe that I owe my neighbours my best, and given the needs that we have that are not otherwise being addressed by other levels of government, I feel like we’d be half-assing it on many files if we limited ourselves to what is strictly required of us. And given that many of the things that are not strictly required of us are also good for our local economy and service levels, in ways that enrich our community rather than just costing us money, I have a hard time drawing a clear line on where we should prioritize saving money over taking action. I believe that we’re all better off when more of us are thriving, so if we have the power to pool our resources to lift up some of our residents then that’s a valid and positive use of our money to improve all of our lives.
The Cost of Doing Nothing: Saving by Spending
I brought up the issue of the wastewater treatment plant at the all-candidates meeting, as an example of how deferred spending can be expensive. When a previous council was first told about the need to fix the wastewater plant, the cost estimates were in the millions, and were deemed too expensive (there were also arguments about how to fix it, but that’s another issue); but back then, at least it was single-digit millions. Years later it was back to council, as little had changed and now the Ministry of Environment was fining the municipality for polluting the bay; that money was pure waste, the cost of doing nothing. Council again debated fixing the plant, and some pushed for increased capacity and a change to a mechanical plant, to plan for the future. That was deemed far too expensive, at $20-40M. Now, two terms later, we ended up there anyway, at a cost estimate of $52M. And a member of that council from a few terms ago still publicly says that none of these costs are needed and that we’re unnecessarily bankrupting the community. (They’re wrong on both counts.) The cost of delays in spending are real.
We have an Asset Management Plan, which the province now requires because it can help prevent municipalities from going bankrupt. It requires that we assess the condition of all of our infrastructure and amortize the costs of those over their lifespans, effectively setting aside money every year to replace infrastructure many years from now. The goal is to ensure that every time we need to dig up a road to replace a pipe, the money is already in the bank. This approach ensures that we’re always actively thinking about how best to spend tax dollars to maintain infrastructure and services, knowing that we need to be good for it when the bills become due. We currently have a $7 million spending gap. That means we’re pretty far behind on setting aside money for future infrastructure needs. Catching up on that will mean getting money from somewhere (see above) so that we aren’t caught in the lurch in the future; and committing to actually spending that money when it’s needed, rather than pushing our infrastructure too far and wishing we’d spent when we should have.
But the cost of under-spending is just as true in services, too. I always point to the social cost of homelessness, which calculates how much more someone who is unhoused uses public resources like hospitals, policing, first responders, social assistance, by-law enforcement, etc., and a 2017 study pegged it at over $50k/year in Toronto. While it might be less in our area, the cost of everything has increased dramatically since 2017, so it’s likely much higher than that now. But the cost of housing someone is far, far less than that. By under-spending on social housing, we choose to spend more and more on so many other things! And yet, social housing and other programs designed to stabilize the lives of people experiencing poverty are often one of the things at risk of being cut when we tighten our belts.
When we emphasize fiscal deficits over social and infrastructure deficits, we spend more money in the long run. (Municipalities aren’t allowed to run fiscal deficits, to be clear; we need to raise taxes to meet our obligations. But the point still stands that under-spending to avoid increasing taxes costs us more in the long term!)
This is made very clear in our Integrated Community Sustainability Plan, which emphasizes changes in our approach to infrastructure and social programming to make us less vulnerable to climate disasters, or even just the everyday challenges of a warmer climate (e.g., increased freeze/thaw cycles will wreak havoc on our roads, and higher average temperatures put vulnerable seniors at risk of heatstroke without adequate cooling systems). This plan was called out as a “want” rather than a “need”, and I couldn’t disagree more. It’s about sound planning for an uncertain future, which is a pretty conservative approach!
Conclusion
All of that to say that I get why people want lower taxes, but I feel that the current council has been through these arguments and issues. We know we’re coming from behind on a lot of things, but that we won’t be well-served by passing those problems on to the next council, or the one after that, or the one after that. We’ve started some ambitious projects because we see the long-term value in them; and we’ve asked the question, “what happens if we don’t pay for this now?” The answer is, always, that we’ll pay for it eventually anyway, but with interest. The best time to do something is usually a long time ago; the next best time is usually right now.
There are some hard choices to be made in the coming term about where to draw the line, and I look forward to those discussions. I hope to be at the table so that I can once again ask: “what’s the cost of doing nothing?”